Systems & Processes

K.Krishnan 8th January 2014

Content
Importance of business policies Delegation of power Key documents and their importance Difference between system and process Example of a process and associated policies and systems

Business Policies
Helps regulate the business operations Provides clarity to employees as to what to do Helps manage costs
Credit Policy Cheque signing authority Pricing Policies Warranty policy Recruitment policy Retirement policy Travel policies Entertainment policies Provisioning policies CREDIT POLICY Credit Rating basis Credit Limits Credit Period Advance collection Overdue Interest Discontinuance of supply Collection Methodology Outsourcing Vs Insourcing

Credit Policy Case

Case 1 - Milk Route Dairy

Deals in pasteurized milk, Long shelf life milk Credit Policy for pasteurized milk required Distribution system
Company supplies to distributor Distributor supplies to milk agents Milk agents supplies to homes / hotels etc Milk agents also supply to retail shops

Customer pays cash when buying or pays in advance Distributors are good and financially sound parties Agents are small time business people with low financial capabilities Cash for the product reaches agents as the end consumers buy

What should be the credit policy and collection process

Case 2 Telecom Post Paid

Millions of customers Monthly billing cycle Bill value varies from Rs.200 to 20,000 Customer segments
Individuals Corporates SMEs

Issues
Rate the credit worthiness Basis for fixing credit limits Collection Process Disconnection Process

Delegation of Power

Key Elements
Defines financial authority Lists key decision making points Ensures smooth execution

SAMPLE DELEGATION OF POWER

Key Documents & Importance

Sales Related Documents

Issue Slip Delivery Challan Way Bill Excise Duty Challan Octroi Challan Transit Insurance Policy Invoice Receipt

Purchase Related Documents

Purchase Order Work Order Goods Receipt Note / Materials Receipt Note Quality Report Vendor Bill Payment Voucher

Payment Related Documents

Payment Voucher Petty Cash Payment Voucher Cheque

Systems & Processes

Process performance
Process performance can be judge against the five key performance objective: Quality Speed Dependability Flexibility Cost

Throughput, work content, cycle time, and work in process

Throughput the time for a unit to move through the process Work content the total amount of work required to produce a unit of output (measured in time)

Cycle time The average time between units of output emerging form the process
Work in process (WIP) unfinished items in a production process waiting for further processing e. g. when customers join a queue in a process they become WIP

throughput = work in process x cycle time

Continuous Process
Extremely high volumes and low variety: often single product Standard, repeat products Highly capital-intensive and automated Few changeovers required Difficult and expensive to start and stop the process Product layout: usually flow along conveyors or pipes

Mass (Line) Processes

Higher volumes than Batch Standard, repeat products Low and/or narrow skills No set-ups, or almost instantaneous ones Cell or product layout

Batch Processes
Higher volumes and lower variety than for jobbing Standard products, repeating demand. But can make specials Specialized, narrower skills Set-ups (changeovers) at each stage of production Process or cellular layout

Jobbing Processes
Very small quantities: one-offs, or only a few required Specially made. High variety, low repetition. Skill requirements are usually very broad

Skilled jobber, or team of jobbers complete whole product

Fixed position or process layout (routing decided by jobbers)

Process mapping symbols

Operation (an activity that directly adds value) Inspection (a check of some sort) Transport (a movement of some thing) Delay (a wait, e.g. for materials) Storage (deliberate storage, as opposed to a delay) Beginning or end of process Activity

Input or Output from the process Direction of flow Decision (exercising discretion)

Process mapping symbols derived from Scientific Management

Process mapping symbols derived from Systems Analysis

Raw Materials

Assembly

Stored Sandwiches

Move to Outlets

Stored Sandwiches

Sell

Take Payment

Standard sandwich process Customer Request Raw Materials Assembly Take Payment

Customer Request

Customized sandwich old process

The operation of making and selling customized sandwiches

Prepare

Sandwich materials and customers

Assemble as required

Take payment

Customers assembled to sandwiches

Bread and Base filling Assemble whole sandwich Use standard base? No Yes Customer Request Assemble from standard base Stored Bases Fillings

The outline process of making and selling customized sandwiches

The detailed process of assembling customized sandwiches

Customized sandwich improved new process

Assemble whole sandwich

Assembly of sandwich bases

Use standard base?

No

Take Payment Fillings

Bread and Base filling Stored Bases

Yes Customer Request

Assemble from standard base